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HELENA – The state political practices commissioner Tuesday found sufficient evidence that some groups violated state law with their efforts to pass a 2010 ballot initiative that capped the interest rates on payday loans in Montana.

The ballot measure, Initiative 164, was overwhelmingly approved by voters. Its passage has wiped out the payday loan industry in Montana, former industry officials say.

Commissioner Jim Murry concluded that eight groups broke state campaign laws and rules while promoting I-164: 400 Percent Interest Is Too High – Cap the Rate; Montana Women Vote; Montana Human Rights Network; AARP Montana; Rural Dynamics Inc.; NeighborWorks Montana; and Montana Community Foundation and its endowed fund, the Women’s Foundation of Montana.

Most of the violations involved the groups’ failure to put “paid for by” disclaimers on their websites and Facebook pages and their failure to file financial disclosure reports on time.

The complaint was filed in May 2010 by Bernie Harrington of Billings, who owned six payday loan businesses.

Harrington said Tuesday that the decision “is rather moot at this point.”

“I think it confirms some of the stuff that we thought was going on,” he said. “The commissioner identified that the violations were rather technical in nature. There’s a lot of water under the bridge since that point.”

Since passage of the 2010 initiative, all of the more than 110 payday lending businesses in Montana have been shut down, eliminating 500 to 600 jobs, Harrington said.

Jonathan Motl, the Helena attorney for the Cap the Rate group that spearheaded the signature-gathering effort, criticized the findings.

“It is an extremely picky, unfortunate, I think, use of public resources,” Motl said. “There was no harm to the public. There is absolutely nothing in here where everything wasn’t fully disclosed. It was late in a couple of instances.”

I-164 capped at 36 percent the annual interest rate, fees and other charges that payday, title and retail installment lenders could charge.

The groups obtained enough signatures to qualify I-164 for the November 2010 ballot, and Montana voters approved it, 72 percent to 28 percent.

The commissioner’s recommendations will be sent to various county attorneys. If they decline to prosecute, Murry’s office will try to negotiate with the groups to reach settlements. If that fails, the commissioner can file a civil case in District Court.

The political practices commissioner’s staff made a preliminary calculation of the potential fines totaling $2,430. That’s the starting number for negotiations with the group, said Mary Baker, program supervisor in the political practices office.

Broken down by group, the potential fines are: Cap the Rate, $1,500; Montana Women Vote, $250; Rural Dynamics, $100; Montana Community Foundation and its endowed fund, the Women’s Foundation of Montana, $200; AARP Montana, $150; NeighborWorks, an insignificant amount; and Montana Human Rights Network, $230.

Missoulian State Bureau reporter Charles S. Johnson can be reached at (406) 447-4066 or at chuck.johnson@lee.net.

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